Analysis of the Impact of Trump’s Cancellation of Tariff Exemptions for Small Packages Between China and Hong Kong on the E-commerce Industry
On April 2, 2025, U.S. President Trump signed an executive order announcing the cancellation of the tariff exemption policy for small packages valued under $800 from mainland China and Hong Kong, effective May 2. Eligible packages will be subject to a 30% value-based tariff or a $25 per item tariff (increasing to $50 per item after June 1). Additionally, carriers are required to report shipment details to the U.S. Customs and Border Protection (CBP). This move directly impacts Chinese businesses relying on low-cost cross-border e-commerce models. Below is an analysis of its specific effects and FreightAmigo’s response plan.
I. Impact and Challenges on the E-commerce Industry
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Rising Costs and Declining Price Competitiveness
- Surge in Tariff Costs: Low-priced goods—such as clothing and electronic accessories—that previously entered the U.S. duty-free through the “De Minimis” policy will now face a tariff of either 30% of their value or a fixed rate of $25 per item (rising to $50 per item after June 1). For instance, for a product valued at $50, the tariff expense could exceed 60% of its selling price, forcing companies to either raise prices or compress their profit margins.
- Increase in Logistics Declaration Costs: Carriers will be required to submit additional shipping details and pay for an international carrier bond, further driving up logistics expenses.
- Impact on Typical Companies: Chinese fast-fashion e-commerce platforms, exemplified by companies like Shein and Temu—whose business models heavily rely on direct shipping of small packages to U.S. consumers—will see their price advantages significantly eroded by the new policy.
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Pressure from Supply Chain Restructuring
- Need for Production Line Relocation: To evade the burden of high tariffs, some companies may consider shifting production to other countries or to Mexico. However, in the short term, these companies face risks of disrupted supply chains and incur significant migration costs.
- Transformation in Inventory Management: Companies will need to pre-stock goods in U.S. overseas warehouses—via sea or air transport. This move, however, might be financially challenging for small and medium-sized sellers burdened by storage costs.
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Rising Compliance Risks and Increased Operational Complexity
- Certification of Origin and Product Classification Review: The U.S. Customs and Border Protection (CBP) will intensify checks on package contents. Even if a product is produced in China but is rerouted through a third country, it may still be subject to additional tariffs. As a result, companies must accurately determine and prove the origin of their products.
- Tightened Crackdown on Prohibited Items: Under the pretext of intercepting fentanyl smuggling, U.S. authorities have stepped up inspections. This heightened scrutiny increases the risk that an entire shipment could be detained or even destroyed if a misclassification or error occurs.
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Increased Market Consolidation
- Risk of Small and Medium Seller Exit: Smaller e-commerce businesses that cannot absorb the higher tariff and compliance costs may be forced to exit the market, leading to further concentration of industry resources in the hands of larger platforms.
- Shift in Consumer Behavior: With the price increases on low-cost products, U.S. consumers might turn to domestic e-commerce platforms or alternative supply chains from Southeast Asia, which could result in a declining market share for Chinese sellers.
II. FreightAmigo’s Comprehensive Support Solution
In response to the challenges mentioned above, FreightAmigo leverages its global logistics network and professional customs clearance expertise to provide the following key supports for e-commerce enterprises:
1.Automated Document Processing
- Automatically generates commercial invoices and certificates of origin that comply with CBP requirements, while proactively assessing product classification risks (such as incorrect HS Code assignment). This helps reduce delays or fines resulting from documentation errors.
2. 24/7 Professional Logistics Support
- Our team of experts is available around the clock to respond immediately to any unexpected issues during transportation (such as temperature control anomalies or clearance delays), ensuring full compliance throughout the process.
3. Custom Clearance Service
- Our licensed team is adept at handling complex customs clearance procedures, including product classification, valuation, and determination of origin, ensuring compliance with both domestic and international regulations. We proactively provide professional guidance to help mitigate risks, resolve disputes, and expedite the clearance process, thereby reducing delays, fines, and unforeseen costs.
4.Digital Trade Financing Solutions
- FreightAmigo’s digital trade financing solution offers flexible credit lines and tailored working capital to enterprises and SMEs. The automated credit review process not only boosts overall receivables efficiency but also helps businesses quickly bridge working capital gaps, ensuring that they have sufficient cash flow to support operational growth.
Conclusion
Trump’s policy to cancel tariff exemptions for small packages has compelled cross-border e-commerce to shift from a “low-cost orientation” to a “compliance and efficiency-driven” model. Through professional customs clearance services and digital trade financing solutions, FreightAmigo not only alleviates short-term cost pressures for businesses but also helps them build long-term risk resilience, enabling them to maintain competitiveness in a turbulent trade environment.
